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Nahalchnad Laloochand Private Limited Vs. Panchali Co-operative Housing Society is a story of greed and excesses. Twenty five stilt car parking spaces in a building were sold by the builder to rank outsiders. Flats purchasers in the building eventually formed a society; and started obstructing the use of these parking spaces by the outsiders. Finally, the builder knocked on the doors of the City Civil Court for a permanent injunction against the Society, restraining it from distributing, in any manner, the possession of the car parking spaces. His was suit dismissed with costs. The matter then went to the Bombay High Court. 25th April, 2008 left the builder redfaced. Yet, he did not relent and went all the way to the Supreme Court, for he was convinced that he had taken all the necessary consents and the flat purchasers could not go back on their word. Along the way, two others joined the torch bearer, as the ultimate judgement would affect their rights too.

How could the courts not grant a simple injunction against the miscreants? Not only in their respective ‘Agreements to Sell’ had the flat purchasers concurred to such sale of parking spaces by the builder but also given separate declarations to that effect. A true labyrinth of statutes, case laws, hair splitting over definitions, ensued. Provisions of Maharashtra Ownership of Flats Act 1963 (MOFA), Maharashtra Apartment Ownership Act 1970, the Development Control Regulations promulgated under Maharashtra Regional and Town Planning Act, were pressed before the Apex Court and well reasoned out by it.

We all know that builders are entitled to sell a ‘flat’. So, at first, it was contented that stilt car parking space was a ‘flat’ as defined under MOFA. This ridiculous contention was, of course, rubbished by the Court. Eloquently the Supreme Court further concluded, “we find no justifiable reason to exclude parking areas (open to the sky or stilted portion) from the purview of `common areas and facilities' under MOFA”. ............... “The promoter has no right to sell any portion of such building which is not `flat' within the meaning of Section 2(a-1) and the entire land and building has to be conveyed to the organisation; the only right remains with the promoter is to sell unsold flats. It is, thus, clear that the promoter has no right to sell `stilt parking spaces' as these are neither `flat' nor appurtenant or attachment to a `flat'”.

But this does not mean that everything else, other than a flat, is a freebie. The correct interpretation being that builders cannot independently sell to outsiders common areas and facilities nor can they extract additional sums from the purchasers for purported sale of such common areas and facilities; the price stated in the Agreement to Sell as per the provisions of MOFA being inclusive of the proportionate price of the common areas and facilities.

The practice on the part of builders of separately selling common areas and facilities has been time and again decried by both the Bombay High Court as well as the Supreme Court. On the same premises common terrace, compound, garden etc. cannot be sold separately by builders.

Whatever appeals to common sense and falls within the four corners of equity, justice and good conscience is invariably the law of the land. We have a written constitution and any legislation not in harmony with its basic features can be stricken down. One would do well to remember that no Agreement or declaration executed can override the law of the land. You cannot be forced to ‘contract out’ of what is rightfully yours.

Buyers on the lookout for hand-outs should learn that there is no such thing as a free lunch and builders, on the other hand, should try not to swindle money by selling thin air. After all, avarice too is a sin, a sin, a sin.


Divya B. Malcolm, 

Advocate, Bombay High Court

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